High Debt Levels
Higher levels of corporate, government, and personal debt may be creating a more fragile economic environment. In past decades, low debt was considered prudent and desirable. Today, fiscal policies pursued by the US Federal government have pushed our national debt over $28 trillion, andÂ zero interest rate (ZIRP) monetary policies of the US Federal Reserve Bank (the Fed) effectively encourage higher debt for corporations and households. Are higher debt levels a good thing or do they create more potential for economic instability?
Impact of Leverage
In 2008/2009 excess leverage (debt) caused a credit freeze and major recession. Now, leverage imbedded throughout the economy may again be creating conditions where even relatively minor credit incidents or interest rate changes might cause economic stress.
Back to Basics
That is why it is ever so important to have a plan in place. Actively manage your income, liabilities and investment assets for both present day needs and long term goals. Start with the basics and re-evaluate your household finances. In fact, we’ve developed a household expenses & budget tool for this very purpose. It can help you in two ways. First, our expense tool helps you determine your retirement planning income target. Second, it shows how your spending habits look versus the average American household in a certain income bracket.
Knowledge is Power
Simply knowing and seeing how your income is allocated over time is a great starting point. This knowledge can help you identify where to make changes, and sometimes even seemingly small changes may have a significant impact on your financial future. Visit our contact page here, type “expense worksheet” in the Tell Us More section, and weâ€™ll send you the tool. You are welcome to drop us a line. Thanks for visiting!